Houston-based Greenstar Recycling, headquartered in one of the world's energy capitals, is participating in a project that will make it an oil producer. The alternative energy project is taking place not in the oil fields of Texas, however, but in the northeastern Ohio city of Akron.

"This joint venture will help us better serve our municipal customers by providing a more consistent market value for their plastics that are otherwise largely unmarketable," says Matt Delnick, Greenstar CEO. "It will increase recovery rates by pulling more plastics out of landfills," he adds.

In early November, Greenstar and Vadxx Energy of Akron signed a memorandum of understanding (MOU) to form the joint venture. The business venture will be the first commercial-scale application of Vadxx' system, designed to turn polymer-based scrap, mainly mixed plastics, into oil via a process called thermal depolymerization.

Worthwhile Venture
Vadxx (www.vadxx.com) is a company that manufactures or recovers commodities from petroleum-based discards. The company's process yields synthetic crude oil, natural gas and a carbon "char" product. According to Vadxx's management team, when Greenstar got on board, the company's business plan took a quantum leap in legitimization.

The process can work with a number of feedstocks, according to Vadxx, including plastic scrap, notably Nos. 3 through 7 mixed plastics, which can be more difficult to market; scrap tires with the metal fraction removed; auto shredder residue (ASR); medical waste; and other polymer-based products that can be converted into several marketable process outputs.

"Vadxx will help us recover plastics from the material stream and repurpose them as feedstock for the production of oil," Delnick says.

"Disposing of these materials is a cost center right now," says Sean L. Arnold, chief operating officer of Vadxx. "It becomes a revenue stream with this process."

The process uses pyrolysis with conventional vaporization and condensation to produce a liquid (crude oil), natural gas (which is reclaimed to fire the system) and char.

Rockwell Automation Global Solutions, Milwaukee, Wis., will engineer the unit and will oversee the building of Greenstar's system. "They will finish the front end," Arnold says.

Greenstar and Vadxx say they expect the joint venture to begin producing crude oil in the fourth quarter of 2012 at the Greenstar location in Akron. Two other firms—a tire recycling operation and a medical waste facility—also are on board to implement the process in early 2013.

Pittsburgh-based Liberty Tire Recycling also has signed an MOU with Vadxx to convert scrap tire shreds into oil in Cleveland using feedstock from the company's Minerva, Ohio, tire recycling plant.

Vadxx's managers also say they are close to agreements with an auto shredder operator to convert ASR (auto shredder residue) to oil and with a hospital group to covert medical waste to oil.

The plants for Greenstar, Liberty Tire and others will be refined and expanded versions of the fourth-generation pilot plant in Akron, which was built on a 1:35 scale, Vadxx says.

Making it Pay
Under the business model, Vadxx will create an individual joint venture with each recycler or waste handler that wishes to produce oil from scrap. The materials stream provider is responsible for providing a quality stream of material to the Vadxx site, says Russell Cooper, vice president of business development.

"We expect our partner to clean the material and extract any contaminants," Cooper says. The cleaner the waste stream that goes into the system, the more profit the partnership makes in the conversion process.

Ideally, Cooper says, the Vadxx process works best with a fine, dense material of less than 1 inch in size. "But we don't want to micromanage the partner," he adds.

Pictured from left are Julius Lee, Sean Arnold, Jeff Jatich and Russell Cooper.

The ideal material infeed stream would consist of polypropylene (PP), polystyrene (PS) or polyethylene (PE) waste, according to Vadxx. The company prefers not to see marketable PET (polyethylene terephthalate) , PVC (polyvinyl chloride) because of the chlorine or nylons in the system, though Cooper acknowledges that almost any inbound stream will contain some fraction of those materials. According to the company, its system is flexible enough to consume common amounts of material like PVC, despite the chlorine content.

"We know the sorting process is imperfect," Arnold says. "We expect to see PET in the stream, even if we don't go seek it."

Economies of scale can make or break an energy recovery operation.

In an ideal case, a recycling company like Greenstar will provide 12,000 to 16,000 tons of feedstock yearly. The plan is to have continuous processing, with the plant operational 330 days annually. This allows for scheduled maintenance and other downtime, Vadxx says.

Arnold is well-aware that a decisive failure point for commercial processing plants is size and cost. He says Vadxx' modular commercial units are designed to process more than 2 tons of feedstock per hour. The company's business model is designed to meet the capital, space and feedstock requirements required to be viable in the marketplace, he says.

"We need a barrel of crude oil to sell in the $35 to $45 range to break even," Arnold says. (In late 2011, crude oil was selling for approximately $90 per barrel.)

In addition, the Vadxx process requires a heaping pile of feedstock on a regular basis. One reason the company started in the Cleveland-Akron area, apart from being close to its home base, is the huge amount of scrap and solid waste generated by the 6 million people who live in the region between Cleveland and Pittsburgh.

"You can't get [to critical mass] in a region with just 500,000 or 1 million people," Arnold says.

Handling Char
Beyond the sale of the resultant oil, another area Cooper sees potential additional financial return is in the sale of the char byproduct, which has a high carbon content.

"Right now, we can sell the char at a nominal rate," Cooper says. He adds that he hopes to see an entrepreneur with an idea for repurposing the material.

"We are looking for someone to bring us ideas for a higher-value use of the char," Cooper says. "We are confident that it is salable," he adds. "It will not have to be part of the waste stream."

Arnold says an ideal Vadxx material stream would be tons of sorted milk jugs without caps. However, the higher-value use for that type of material is to be used as a raw material in new containers, and he knows anyone who sorts HDPE (high-density polyethylene) or PET can get a higher return in that market.

Other than the char, there is little residue from the process, Cooper and Arnold say.

The company has honed in on several key factors to its business model:

Production rate – The value of the oil produced must significantly exceed the cost of manufacturing, which includes energy, raw materials, catalyst, labor, packaging and transport.

RB Products, a Houston-based energy company, will sell the oil produced at the various processing sites, which is an important "end-game" for both Vadxx and its partners.

Cost avoidance, such as skirting landfill fees or additional trucking, are icing on the cake.

"We will earn the right to feel good about reducing foreign oil exposure and reducing landfill waste by being a profitable company," Arnold says. No matter the cost of oil down the road, nor the price of inputs, Arnold says he feels confident in the future.

"It is a dynamic market," he comments, "but remember that we are polymer agnostic. The process works the same. I can't predict the market in 20 years, but the process will accommodate it."

The author is a Recycling Today contributing editor and can be contacted at curt@curtharler.com.